SAT | An order without reasons is violative of Article 14 of Constitution; appeal allowed in light of Clause 17 of the NSE Rules

Securities Appellate Tribunal (SAT), Mumbai : The Bench of Tarun Agarwala, J. (Presiding Officer) and C.K.G. Nair (Member) and M.T. Joshi, J., (Judicial Member) allowed the appeal filed questioning the veracity and legality of the order passed by the Disciplinary Action Committee of the National Stock Exchange of India Limited by which the appellant who is a broker was expelled from the membership of the NSE.

The appellant filed a review application on February 27, 2018, and the review application was rejected. Prakash Shah, the counsel for the appellant, had put forward Clause 17 of the NSE Rules which provides a provision for reconsideration/review of its orders. It states that “according to the provisions of the Securities Contracts (Regulation) Rules, 1957 the relevant authority may of its own motion or on appeal by the trading member concerned within 90 days from the date of communication of decision of the relevant authority to the member reconsider and may rescind, revoke or modify its resolution… In a like manner, the relevant authority may rescind, revoke or modify its resolution expelling or suspending any trading member.” The applicant further stated that two boxes were placed before the DAC. In one box it was written ‘Review Rejected’ and in the other box it was written ‘Review Accepted’. The DAC ticked the box which contained the message ‘Review Rejected’ without any application of mind.

The Tribunal held that review application was required to be dealt after giving an opportunity of hearing to the appellant which in the instant case was not done. It was also opined that a reasoned and speaking order should have been passed by the DAC. There was a total absence of expression or opinion giving reasons for rejecting the review application. The impugned order was, thus, violative of Article 14 of the Constitution of India and cannot be sustained. The Tribunal quashed the review order and remitted the matter again to the DAC to decide the review application afresh after giving an opportunity of hearing the applicant. The appeal was thus allowed. [CPR Capital Services Ltd. v. NSE Ltd., Appeal No. 94 of 2018, decided on 09-05-2019]

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